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Monday, November 21, 2011

Emerging Economies Export Structure Changing tendency

I had a debate on the topic of Chinese economy with Saliq recently, and I have been thinking about this for couple of days. I agree with his point that the emerging economies, the US, and the EU economies are joint together. But I think the financial market contributes more than the merchandise goods market to this interrelation between high-income economies and emerging economies. That is the reason why I cannot agree with his point that the US can draw pressure on China effectively by reducing import from China. I am not biased to China in terms of currency exchange rate and international cooperation on crisis solving, just want to debate on the point of export structure of emerging economies.

I checked the export data of emerging economies on the World Bank website, and got some graphs to show the change in export structure.

One fact I have to admit is that the export to high-income economies contributes a lot to the GDP of emerging economies( around 45%-90% of tatal export). But game is changing today. The percentage of export to high-imcome economies to total export kept decreasing in the past decade. While the percentage of export to developing (emerging) ecomonies kept increasing. I think this shows a tendency of more frequently trading between emerging markets. Both the demand and trades of emerging markets are spreading. Which means the dependence on export to high-income economies is weaken.

Therefore, the trade friction with high-income economies will not definitely lead to a collapse of goods sale in emerging markets. At least, they are working hard to build their own markets in order to get rid of the export dependence.

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